31 UK market 2014: key themes Economy emerging from recession after five years of austerity and falling incomes Duty escalator on wine of RPI + 2% discontinued... For now Wine volumes peaked in 2007 and have been declining ever since Off-trade has held up well, but on-trade has suffered Basic wine drinking habits have not changed too much Price per bottle has gone up Some new opportunities and threats 2

32 Economic recovery.... UK GDP will be + 2.9% in 2014 according to the IMF, making the UK the fastest growing economy in the G7 Unemployment has fallen to a five year low of 6.5%, having been over 8% just 18 months ago 3

33 ... However this is masking some more fundamental changes to the economy Real wages have been declining for 6 years, so consumers are on average about 8% worse off in real terms, according to the NIESR Wealth inequality is growing: the top 1% of earners now earn 16% of all UK income, up from 9% in 1992 (Spain: 9%) Younger people are behaving very differently to their parents at the comparable stage in life Sources: NIESR, IFS, Wine Intelligence/London Wine Fair Carpe Vinum Vol 1: Generation Y 4

34 Over the past 20 years, wine has been winning relative to other drinks... Source: ONS Household Survey,

60 Selling online in the UK Market How wineries from Rioja can succeed in a crowded market Justin Howard-Sneyd MW The Hive Wine Consulting Ltd

61 Who am I? Global Wine Consultant to: Laithwaite s Wine (a brand of Direct Wines) 350 Million a year Over 4 Million cases Owner / Founder Domaine of the Bee 4 Hectares in the Roussillon 40,000 a year 350 cases

62 What are we going to cover? Why should you sell D2C (Direct to Consumer)? What counts as D2C? How big is the market in the UK? Who are the players? What are the major trends in online and digital? What about going it alone?

63 The Global picture

64 How to get around the bottleneck.. Selling Direct!

65 The Direct-to-consumer Sector

66 How big is UK D2C market? Slide reproduced with the kind permission of Wine Intelligence

67 What is D2C? Grocers through grocery sites Grocers through dedicated sites Big wine retailers with a website Traditional mail-order that also sell online Small independents, who supplement their shop sales Online-only players Non-wine companies that offer wine

68 Grocery websites

69 Grocers Wine Direct sites

70 The demise of Morrisons

71 Just as Waitrose launches a new site..

72 Bricks and Mortar wine retailers selling online

73 Traditional Mail-Order, now multi-channel

74 New web only players

75 Small independents who sell online

76 Who else?

77 New players coming soon? With the Napa Valley so close to Silicon Valley, it is no surprise that there has been a rush to use digital technology to enhance wine drinkers experience. Geeks love wine. There s lots of data to play with

91 Any recommendation should be subtle and importantly relevant WANT: Relevant and personal offers from brands ACCEPT: Balance of promotional and service information REJECT: Offers/adverts for unrelated products What's hot" - current best sellers. Lists of other customer's favourite wines. Wines that are outside my price range (too expensive or too cheap). Laithwaite s customer research

92 Customers want us to use their wine preferences to select wines for them. It has to feel personal. How appealing are the following methods which Laithwaite s could use to tailor your wine plan cases? Select wines similar to wines I ve tried and enjoyed before Select wines based on styles I select Select specific wines I ve tried and enjoyed before Select wines based on grape varieties I select Select wine based on a taste profile created by answering taste-related Select wines based on countries / regions I select 87% 79% 76% 70% 60% 57% Select wines based on the ratings and favourites of other customers 8% % = Net Scores (All appealing minus all unappealing) Laithwaite s customer research

93 The Laithwaite s recommendation tool

94 Brands selling direct

95 What about going it alone?

96 4 types of ecommerce Ad hoc ecommerce. Passively list your wines, add a shop, and sit and cross your fingers ROI 1/5 Targeted ecommerce mailings or s to specific groups of customers, to generate a response ROI 3/5 Recurring purchase clubs customers commit to a regular shipment every month or every quarter ROI 5/5 Gifting making it easy for your customers to gift wine is a powerful way to spread the word, and let your best customers act as brand advocates ROI 5/5

97 3 points of principle D2C cannot just be an add-on. You have to align your whole business and brand to deliver brilliant a D2C experience Wine ecommerce is hard, but can be very profitable. Make sure you choose the right tools and approach it in the right way Treat D2C like the sales channel that it is. You have to work it to generate sales

98 My website Please join our mailing list at

99 Our software provider

100 Our software provider D2C cannot just be an add-on. You have to align your whole business and brand to deliver brilliant a D2C experience Wine ecommerce is hard, but can be very profitable. Make sure you choose the right tools and approach it in the right way Treat D2C like the sales channel that it is. You have to work it to generate sales

111 SPAIN: Premium vs brand Spanish paradox; largest production million hl in Generic value; 0.40 ltr lower than France ( 0. 70) and Italy ( 0.43) Yet largest fall in domestic consumption; down 19.5% in 5 years from EU restructuring, despite grubbing up 150,000 hrs has effect of making vines more productive ( 11 rather than 4.5 tonnes per hectare)

112 Possible solutions Consolidation of the production chain Increase exports New markets; USA ; China ( 3 million cases in 2013 but 40% in bulk) Move from bulk to premium Further penetration into Fine Wine market. Combination of all of the above

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